O n e – S t o p
Comprehensive Financial
Management Technical
Assistance Guide
U.S. DEPARTMENT OF LABOR
Employment and Training Administration
U.S. Department of Labor Employment and Training Administration Office of Grants and Contract Management Division of Financial and Grants Management Policy and Review
July 2002 i Contents
Financial Management
Technical Assistance Guide
Contents
Preface ... vii
Introduction... vii
Background... ix
Intended Audience for the Guide...x
How the TAG is Organized...x
How to Use the TAG ...x
Cautions... xi
Acknowledgments... xi Part I: One-Stop Financial Management ... I-Intro-1 Introduction... I-Intro-1 Intended Audience... I-Intro-3 How Part I is Organized ... I-Intro-3 Cautions... I-Intro-4 Attachment I-Intro-1 ... I-Intro-5 Chapter I-1: Identification of Shared Costs ... I-1-1 Introduction ... I-1-1 One-Stop System Design ... I-1-1 Identification of Shared Costs... I-1-2 Uses of Shared Costs... I-1-6 Allowable Cost Considerations... I-1-7 Attachments... I-1-7 Attachment I-1-1: Identifying the Shared Costs Process Flow... I-1-8 Attachment I-1-2: Sample List of Shared Costs ... I-1-9 Chapter I-2: Shared Costs Budgets ... I-2-1 Introduction ... I-2-1 Budget Development and Structure... I-2-1 Relationship to Partner Agency Budgets... I-2-3 Modification and Adjustment... I-2-3 Benefits... I-2-4
July 2002 ii Contents
Attachments... I-2-5 Attachment I-2-1: Developing a Shared Costs Budget Process Flow... I-2-6 Attachment I-2-2: Sample Budget Format 1 ... I-2-7 Attachment I-2-3: Sample Budget Format 2 ... I-2-9 Chapter I-3: Proportionate Share and Cost Allocation ... I-3-1 Introduction ... I-3-1 Determining Proportionate Share ... I-3-1 Cost Allocation Requirements... I-3-3 Allocation Methodologies... I-3-4 Allocation Bases ... I-3-6 One-Stop Cost Allocation Plans... I-3-9 Additional Considerations... I-3-9 Attachment I-3-1: Steps in the Cost Allocation Process ... I-3-12 Attachment I-3-2: Shared Costs by Partner ... I-3-13 Attachment I-3-3: Cost Allocation by Item of Cost ... I-3-15 Attachment I-3-4: Sample Allocation Table ... I-3-17 Attachment I-3-5: One-Stop Center Shared Costs by Program... I-3-19 Chapter I-4: Resource Sharing ... I-4-1 Introduction ... I-4-1 Cost Allocation and Resource Sharing ... I-4-1 Resource Sharing Methodologies... I-4-2 Reconciliation and Adjustment Processes... I-4-8 Attachments... I-4-9 Attachment I-4-1: Resource Sharing Process Flow... I-4-10 Attachment I-4-2: Sample Resource Sharing Format... I-4-11 Attachment I-4-3: Sample Monthly Resource Sharing Format ... I-4-13 Chapter I-5: Resource Sharing Agreements ... I-5-1 Introduction... I-5-1 Resource Sharing Agreements... I-5-1 RSA Structure and Content ... I-5-1 Additional Considerations ... I-5-3 Links to the MOU... I-5-4 Chapter I-6: Case Studies ... I-6-1 Introduction ... I-6-1 Case Study No. 1: Co-Located Services and Operating Costs... I-6-1 Case Study No. 2: Common Staff Functions Using FTEs ... I-6-6 Case Study No. 3: Electronic Data Sharing Costs ... I-6-9 Case Study No. 4: Common Services and Associated Costs... I-6-13
July 2002 iii Contents
Introduction ...II-Intro-1 Intended Audience ...II-Intro-2 How Part II is Organized...II-Intro-2 Cautions ...II-Intro-4 Chapter II-1: Fund Distribution... II-1-1 Introduction ... II-1-1 Federal Budget Process ... II-1-1 WIA Allotments and Allocations... II-1-2 Non-WIA Allotments and Allocations ... II-1-4 Chart II-1-1: Formula Fund Distribution WIA Title IB – Adult ... II-1-7 Chart II-1-2: Formula Fund Distribution WIA Title IB – Dislocated Worker ... II-1-8 Chart II-1-3: Formula Fund Distribution WIA Title IB – Youth... II-1-9 Chart II-1-4: Fund Distribution WIA Title IC – Job Corps... II-1-10 Chart II-1-5: Fund Distribution WIA Title ID – Native American Programs... II-1-11 Chart II-1-6: Fund Distribution WIA Title ID – National Farmworker Job Program ... II-1-12 Chart II-1-7: Fund Distribution Employment Services ... II-1-13 Chart II-1-8: Fund Distribution Unemployment Insurance... II-1-14 Chart II-1-9: Fund Distribution Senior Community Service Employment Program... II-1-15 Chart II-1-10: Fund Distribution Trade Adjustment Assistance and NAFTA/TAA ... II-1-16 Chart II-1-11: Formula Fund Distribution Welfare-to-Work ... II-1-17 Chart II-1-12: Workforce Investment Act of 1998 Period of Fund Availability... II-1-18 Chapter II-2: Financial Management Systems ... II-2-1 Introduction ... II-2-1 Regulations and Requirements ... II-2-1 Financial Management System Standards... II-2-2 Chapter II-3: Cost Principles... II-3-1 Introduction ... II-3-1 Federal Cost Principles ... II-3-2 Chapter II-4: Allowable Costs... II-4-1 Introduction ... II-4-1 Cost Principles: Allowable vs. Unallowable... II-4-1 Selected Items of Cost ... II-4-3 Specific WIA Conditions... II-4-4 Attachment II-4-1: Summary of Cost Items ... II-4-6
July 2002 iv Contents
Chapter II-5: Cost Classification... II-5-1 Introduction ... II-5-1 Cost Categories and Activities... II-5-1 Administrative Costs and Limitations... II-5-3 Other Guidance... II-5-6 Attachment II-5-1: Sample Chart of Accounts ... II-5-9 Chapter II-6: Cash Management ... II-6-1 Introduction ... II-6-1 State-Level Cash Management... II-6-2 Cash Management at the Grantee (Non-State) Level ... II-6-2 Cash Management at the Subrecipient Level... II-6-3 Additional Cash Management Considerations ... II-6-8 Attachment II-6-1: Funding Techniques under the Cash Management
Improvement Act... II-6-10 Chapter II-7: Program Income ... II-7-1 Introduction ... II-7-1 Definition... II-7-2 Program Income Inclusions... II-7-2 Interest Income ... II-7-3 Program Income Exclusions... II-7-3 Accounting for Revenue and Cost of Generating Program Income ... II-7-5 Accounting for the Expenditure of Program Income... II-7-6 Uses of Program Income ... II-7-7 One-Stop Program Income ... II-7-8 Chapter II-8: Cost Allocation and Cost Pooling ... II-8-1 Introduction ... II-8-1 Requirements for Financial Management Systems... II-8-2 Elements of Cost and Their Allocability... II-8-2 Treatment of Costs... II-8-4 Cost Pools ... II-8-6 Allocating Personnel Services Cost... II-8-8 Allocation Bases ... II-8-11 Cost Allocation Plans ... II-8-17 Alternative Time Distribution... II-8-20 Attachment II-8-1: Alternative Time Distribution Systems... II-8-22 Attachment II-8-2: Sample Personnel Activity Report... II-8-27
July 2002 v Contents
Introduction ... II-9-1 Federal Reporting Requirements... II-9-1 Subrecipient Reports... II-9-6 Annual WIA Performance Progress Report ... II-9-6 Additional Reporting Considerations... II-9-7 Chapter II-10: Procurement ... II-10-1 Introduction ... II-10-1 State and Other Governmental Grantees ... II-10-1 Nongovernmental Grantees and Subgrantees ... II-10-5 Required Contract Clauses... II-10-7 Additional WIA Requirements... II-10-8 Attachment II-10-1: Fixed Price/Performance-Based Contracts... II-10-10 Chapter II-11: Property Management ... II-11-1 Introduction ... II-11-1 Real Property... II-11-2 Equipment... II-11-3 Federally Owned Equipment (Property)... II-11-6 Exempt Property... II-11-7 Supplies... II-11-7 Intangible Personal Property... II-11-7 Other Property Management Considerations... II-11-9 Attachment II-11-1: Types of Property... II-11-10 Attachment II-11-2: Application of Property Regulations ... II-11-11 Chapter II-12: Audits and Audit Resolution... II-12-1 Introduction ... II-12-1 Audits... II-12-1 Audit Resolution... II-12-6 Stand-In Costs and Audit Resolution... II-12-13 Appeals ... II-12-14 Additional WIA Considerations... II-12-16 Attachment II-12-1: Audit Review Checklists for Single Audits
(Financial and Compliance) Under OMB Circular A-133 ... II-12-18 Attachment II-12-2: ETA Audit Resolution Flow Chart... II-12-20 Attachment II-12-3: Sample Audit Transmittal Letter (for Comment Purposes)... II-12-21 Attachment II-12-4: Sample Initial Determination Transmittal Letter ... II-12-22 Attachment II-12-5: Sample Findings and Determination Format... II-12-23 Attachment II-12-6: Sample Final Determination Transmittal Letter
July 2002 vi Contents
Attachment II-12-7: Sample Final Determination Transmittal Letter
Disallowed Costs and Uncorrected Administrative Findings ... II-12-26 Chapter II-13: Dispostion of Disallowed Costs ... II-13-1 Introduction ... II-13-1 Federal Options ... II-13-1 Non-Federal Options ... II-13-2 Additional WIA Requirements... II-13-3 Attachment II-13-1: Sample Payment Demand Letter ... II-13-6 Chapter II-14: Records Retention... II-14-1 Introduction ... II-14-1 Applicability of Requirements ... II-14-1 Length of Retention Period... II-14-1 Other Rules... II-14-3 Examples... II-14-5 Chapter II-15: Agreement Closeouts ... II-15-1 Introduction ... II-15-1 The Federal/Recipient Closeout Process... II-15-2 The Grantee’s Closeout Procedures ... II-15-3 Designing an Effective Closeout Process... II-15-4 Current DOL Closeout Packages ... II-15-5 Summary... II-15-7 Appendices... Appendices-1 Appendix A: Cross Reference of Administrative Requirements... A-1 Appendix B: OMB Circulars and Related Regulations...B-1 Appendix C: Internet Resources ... C-1 Appendix D: Glossary of Terms and Acronyms... D-1 Appendix E: Subrecipient and Vendor Distinctions...E-1
July 2002 vii Preface • • • • •
Financial Management
Technical Assistance Guide
Preface
INTRODUCTION
This Comprehensive Financial Management Technical Assistance Guide (TAG) is designed to provide operational and financial management guidance for an integrated workforce investment system operating in a One-Stop environment as required by the Workforce Investment Act (WIA or “the Act”).
The WIA of 1998 provides the framework for a reformed national workforce investment system designed to meet the needs of the nation’s employers, job seekers, and those who want to further their careers. Title I of the legislation is based on the following elements:
Training and employment programs must be designed and managed at the local level where the needs of businesses and individuals (customers) are best understood.
Individual customers must be able to conveniently access the employment, education, training, and information services they need at a single location in their neighborhoods. Individuals should have choices in deciding which training program best fits their needs and which organizations will provide that service. They should have control over their own career development.
Individuals have a right to information about the success of training providers in preparing people for jobs. Training providers will provide information on their success rates.
Businesses will provide information and leadership and play an active role in ensuring that the system prepares people for current and future jobs.
A key reform is that the Act establishes a comprehensive network for the delivery of employment and training services through a system of One-Stop career centers within each Local Workforce Investment Area (LWIA). Each local area establishes a One-Stop delivery system to provide both core services and access to other employment and training services funded under the Act and other Federal programs. There must be at least one comprehensive center within each local area, which may be supplemented by networks of affiliated sites. Customers benefit from a One-Stop delivery system with career centers in their neighborhoods where they can access core employment services and be referred directly to job training, education, or other services.
July 2002 viii Preface
As specified in Section 121(b)(1)(B)(i-xii) of the Act and 20 Code of Federal Regulations (CFR) 662.200 of the implementing regulations, the Federally funded programs that must provide core services and participate as “partners” in the creation and maintenance of the One-Stop system are:
(1) Programs authorized under Title I of WIA, serving (i) Adults
(ii) Dislocated workers (iii) Youth
(iv) Job Corps
(v) Native Americans
(vi) Migrant and seasonal farm workers (vii) Veterans (WIA Section 121(b)(1)(B)(i))
(2) Programs authorized under the Wagner-Peyser Act (29 United States Code (U.S.C.) 49 et seq.) (WIA Section 121(b)(1)(B)(ii))
(3) Adult education and literacy activities authorized under Title II of WIA (The Adult Education and Family Literacy Act) (WIA Section 121(b)(1)(B)(iii))
(4) Programs authorized under Parts A and B of Title I of the Rehabilitation Act (29 U.S.C. 720 et seq.) (WIA Section 121(b)(1)(B)(iv))
(5) Welfare-to-Work (WtW) programs authorized under Section 403(a)(5) of the Social Security Act (42 U.S.C. 603(a)(5) et seq.) (WIA Section 121(b)(1)(B)(v))
(6) Senior community service employment activities authorized under Title V of the Older Americans Act of 1965 (42 U.S.C. 3056 et seq.) (WIA Section 121(b)(1)(B)(vi))
(7) Post-secondary vocational education activities under the Carl D. Perkins Vocational and Applied Technology Education Act (20 U.S.C. 2301 et seq.) (WIA Section 121(b)(1)(B)(vii))
(8) Trade Adjustment Assistance and North American Free Trade Agreement (NAFTA) Transitional Adjustment Assistance activities authorized under Chapter 2 of Title II of the Trade Act of 1974 (19 U.S.C. 2271 et seq.) (WIA Section 121(b)(1)(B)(viii)) (9) Activities authorized under Chapter 41 of Title 38, U.S.C. (local veterans’
employment representatives and disabled veterans’ outreach programs) (WIA Section 121(b)(1)(B)(ix))
(10) Employment and training activities carried out under the Community Services Block Grant (42 U.S.C. 9901 et seq.) (WIA Section 121(b)(1)(B)(x))
(11) Employment and training activities carried out by the Department of Housing and Urban Development (WIA Section 121(b)(1)(B)(xi))
(12) Programs authorized under State unemployment compensation laws (in accordance with applicable Federal law) (WIA Section 121(b)(1)(B)(xii)).
Within each local One-Stop center, the programs may be administered by State or local governmental agencies, nonprofit organizations, post-secondary educational institutions such as community colleges, and for-profit organizations. Each One-Stop environment is unique, dependent upon the needs of the local community. The types of partners may also vary by One-Stop center.
July 2002 ix Preface
the administrative and financial management requirements applicable to the required Employment and Training Administration (ETA)-funded partner programs. Additionally, the TAG provides operational guidance for all partner programs on implementing the uniform policy on Cost Allocation and Resource Sharing contained in the Federal Register notice titled “Resource Sharing for Workforce Investment Act One-Stop Centers: Methodologies for Paying or Funding Each Partner Program’s Fair Share of Allocable One-Stop Costs.” (66 Fed. Reg. 29638, May 31, 2001)
BACKGROUND
Why the TAG Was Developed
The Act, the regulations, and the Office of Management and Budget (OMB) circulars contain specific provisions that guide the planning, design, operation, documentation, and assessment of a sound financial management system. This TAG amplifies the Act and the accompanying regulations, clarifies expectations, addresses issues commonly occurring in the field, identifies operational problems and possible solutions, models promising practices, and provides suggestions and techniques to ensure compliance. It is intended to help those responsible for financial management in effectively carrying out their responsibilities.
How the TAG Was Developed
Financial management under government grants is a highly technical and specialized field. In January of 1995, ETA published and disseminated the JTPA Financial Management Technical
Assistance Guide to support the implementation of Job Training Partnership Act (JTPA) programs.
JTPA was the predecessor program to the WIA, and this TAG draws heavily on the approach that was used in developing the JTPA TAG. In June of 1999, for use by WtW grantees, the ETA published the Welfare-to-Work Financial Management Technical Assistance Guide, based on the required application of the OMB circulars. With the implementation of the WIA, ETA believes that a Comprehensive Financial Management TAG would be beneficial to a wider audience and would provide assistance in the development of the required financial systems of the One-Stop career centers. Part I of this TAG is designed to provide guidance on cost allocation and resource sharing issues that have arisen with the implementation of WIA. This part has been reviewed by the Federal partner agencies specified in WIA and by the OMB. With this part, ETA has sought to incorporate lessons from the implementation of WIA thus far. The guidance is drawn from the Federal Register notice dated May 31, 2001, containing the uniform Federal policy on cost allocation and resource sharing for One-Stop career centers. Part II of the TAG is designed to provide guidance on the financial and grant management requirements for the ETA programs that are required partners in the One-Stop system. This Part is modeled on both the JTPA and WtW TAGs and is based on the OMB circulars applicable to all ETA grant programs.
July 2002 x Preface
INTENDED AUDIENCE FOR THE GUIDE
The Comprehensive Financial Management TAG targets State, local, and other grant staff responsible for ensuring that the One-Stop system programs not only provide the necessary program services but also are properly managed and fiscally sound. While financial management personnel may be the primary and most frequent users of this TAG, program administrators and staff are also part of the intended audience. Any individual within the WIA or required partner system who is responsible for some aspect of financial management, fiscal accountability, program accounting, or program management, or who is new to the program, is likely to need and use this resource.
HOW THE TAG IS ORGANIZED
This Comprehensive Financial Management TAG is organized as follows:
Part I provides additional guidance for implementing the cost allocation and resource sharing policy contained in the Federal Register notice dated May 31, 2001. Part I consists of six chapters that describe the methodologies for cost allocation and resource sharing within the One-Stop environment. The specific chapters and their contents are described in the Introduction to Part I. Part II provides the financial and administrative requirements applicable to ETA-funded employment and training programs functioning as required partners in the One-Stop system. Part II
consists of
15 chapters that describe financial requirements such as fund distribution, financial systems, allowable costs, cost allocation, program income, and grant management requirements such as reporting, property management, procurement, and audit.
Appendices. Appendices A through E provide additional resources for the user, including a reference for administrative requirements, a listing of applicable regulations and OMB circulars, Internet resources, a comprehensive glossary with acronyms, and subrecipient/vendor distinctions. All three parts of the TAG have separate introductions that identify the chapters and/or highlight the information to be specifically addressed within the relevant part.
HOW TO USE THE TAG
Readers are advised to use the TAG as a reference and technical assistance tool to ensure sound financial management and consistency in program and fiscal accountability. Users may want to familiarize themselves with each part of the TAG as applicable to their programs in order to understand what it contains and where information may be found.
Once again, users are cautioned that this TAG is for guidance in implementing the requirements of the WIA and the ETA-funded programs that are required partners in the One-Stop system. It does not replace or supplant the Act or the regulations.
July 2002 xi Preface
Special care has been taken to differentiate for the reader what the WIA and other ETA-funded grant programs require, what the regulations require, and what is simply good advice based on experience and sound judgment. Wherever the TAG is quoting the Act or the program regulations, citations are provided immediately following the reference.
The TAG contains a comprehensive glossary in Appendix D. Within the regulations, legislation, and circulars, there may be more than one definition of a single term. To the extent possible, this TAG uses the more extensive definition or the definition found in the legislation. In addition, there are terms that may have similar definitions but may be named differently, i.e., grant and award. If, in any instance, the definitions or their use in this TAG appear to conflict with the Act or Federal regulations, the conflict must be resolved in favor of the Act and the regulations, which take ultimate precedence.
It is impossible to anticipate every eventuality that might occur in administering the various programs. The examples are provided to support explanations in the TAG but are sufficiently generic to assist decision-makers in a variety of circumstances. Still, at best, these examples are merely illustrations of a principle or a method of approaching a particular legislative or regulatory provision. The TAG has been written to assist the One-Stop system and the partner organizations in complying with the cost-sharing provisions of the Act and the regulations, and to provide operational guidance to ETA-funded programs on the financial and grant management aspects of their grants.
ACKNOWLEDGMENTS
This TAG was produced by DTI Associates, Inc., under the terms of Contract Number F-6829-8-00-80-30 with the Employment and Training Administration. The principal author of the TAG is Judi Fisher.
Ed Donahue, Chief of the Division of Financial and Grants Management Policy and Review within the ETA’s Office of Grants and Contract Management, was instrumental in reviewing drafts and provided innumerable helpful suggestions. Amy Knight, also of the Division of Financial and Grants Management Policy and Review, reviewed drafts and provided critical clarifying editorial comments.
Staff from the Department of Labor’s Office of Cost Determination made important comments on the chapters, especially pertaining to Part I of the TAG. Numerous staff members from the ETA’s national and regional offices reviewed draft chapters, and their collective comments helped clarify the concepts and methodologies contained in the document. Finally, financial staff from the Departments of Education and Health and Human Services reviewed Part I of the TAG, and their input is appreciated.
PART I
ONE-STOP FINANCIAL MANAGEMENT
INTRODUCTION
Part I of the One-Stop Comprehensive Financial Management Technical Assistance Guide (TAG) provides guidance for the required partner programs on implementing the Federal Register notice on cost allocation and resource sharing titled “Resource Sharing for Workforce Investment Act One-Stop Centers: Methodologies for Paying or Funding Each Partner Program’s Fair Share of Allocable One-Stop Costs” published at 66 Fed. Reg. 29638 (May 31, 2001). The Workforce Investment Act (WIA or “the Act”) requires each local workforce area to establish a One-Stop system for the provision of certain core services as specified in the legislation. The Act further requires that entities responsible for the operation of additional Federal funding source programs such as educational, human resource, and other workforce investment programs participate as partners in the operation of the One-Stop career centers, thereby creating a seamless delivery system. Within the One-Stop environment, the required partners are the recipients and subrecipients providing services through the following programs:
(1) Programs authorized under Title I of WIA, serving (i) Adults
(ii) Dislocated workers (iii) Youth
(iv) Job Corps
(v) Native Americans
(vi) Migrant and seasonal farm workers (vii) Veterans
(2) Programs authorized under the Wagner-Peyser Act
(3) Adult education and literacy activities authorized under Title II of WIA (The Adult Education and Family Literacy Act)
(4) Programs authorized under Parts A and B of Title I of the Rehabilitation Act (5) Welfare-to-Work (WtW) programs authorized under Section 403(a)(5) of the Social
Security Act
(6) Senior community service employment activities authorized under Title V of the Older Americans Act of 1965
(7) Post-secondary vocational education activities under the Carl D. Perkins Vocational and Applied Technology Education Act
(8) Trade Adjustment Assistance and North American Free Trade Agreement (NAFTA) Transitional Adjustment Assistance activities authorized under Chapter 2 of Title II of the Trade Act of 1974
veterans’ employment representatives and disabled veterans’ outreach programs) (10) Employment and training activities carried out under the Community Services Block
Grant
(11) Employment and training activities carried out by the Department of Housing and Urban Development
(12) Programs authorized under State unemployment compensation laws.
The WIA regulations further stipulate that the required partner programs are to provide funds for the creation and maintenance of the One-Stop system. [20 Code of Federal Regulations (CFR) 662.230(b)] The funding arrangements are then incorporated into the Memorandum of Understanding (MOU). The Act is clear that the One-Stop system is to serve as the primary vehicle for the provision of employment and training services, regardless of funding sources, within a local area. As a result of the WIA mandate that several employment and training programs funded under a number of different laws by various Federal agencies collaborate and work together as One-Stop partners, the Office of Management and Budget (OMB) directed that the Department of Labor (DOL) take the lead in developing a uniform policy on acceptable methodologies for cost allocation and resource sharing in the WIA One-Stop environment. This uniform policy is contained in the
Federal Register notice dated May 31, 2001, on cost allocation and resource sharing. The policy
was developed in cooperation with the Departments of Education and Health and Human Services, as well as the DOL’s Office of Cost Determination and Office of the Inspector General. In developing this policy, the Federal agencies addressed an underlying problem of the One-Stop system: how to assure the appropriate accumulation of cost information and payment for these shared costs in a single location. The concepts embodied in the policy are distinct. Cost allocation is addressed in the OMB circulars and is based on the premise that Federal programs will bear their equitable proportion of shared costs based on the benefit received by that program. Resource sharing is the methodology through which One-Stop partners will pay for, or fund, their equitable or fair share of the costs. The Federal Register notice contains an explanation of both concepts and acceptable methodologies for both cost allocation and resource sharing within the One-Stop environment.
There are references to the various One-Stop models—Full Integration, Co-Location with Coordinated Delivery of Services, and Electronic Data Sharing—throughout the TAG. The guidance in the TAG was designed and developed to provide program administrators and practitioners with the tools to assist them to more fully develop the One-Stop operations within their jurisdictions and move toward development of the Full Integration model. Notwithstanding ETA’s desire to fully develop One-Stop operations and provide cohesive and comprehensive services within the One-Stop setting, the TAG also provides guidance, ideas, and tools that may be used by all One-Stop partners regardless of the program design, including the Co-Location model or any combination of models.
The guidance in this section of the TAG is presented as a series of sequential steps to be undertaken by the One-Stop partners to fully develop the shared funding. Each of the first five chapters presents a separate step, culminating with the development of the Resource Sharing Agreement (RSA). The RSA is the funding document for the MOU and contains the financial information on shared One-Stop costs, including the cost allocation methodologies and payment
mechanisms, which have been developed by the partners within the One-Stop system or center. Each of the chapters is described more fully later in this introduction. Attachment I-Intro-1 is a schematic presentation of the five steps.
This section of the Comprehensive Financial Management TAG addresses the policy contained in the aforementioned Federal Register notice. Part I of the TAG has been developed with the input and comments from those Federal agencies involved in the development of the
Federal Register notice in order to provide operational guidance and examples that implement this
uniform policy for cost allocation and resource sharing within the One-Stop delivery system.
INTENDED AUDIENCE
This section of the TAG is designed for use by all required partners in the One-Stop to aid them in identifying the shared costs of a One-Stop center and in developing appropriate methodologies for cost allocation and resource sharing. While the TAG targets financial management staff, this section of the TAG may also be appropriate for program managers, One-Stop operational staff, Local Workforce Investment Boards (LWIBs), and other Federal agency staff with the responsibility for developing the One-Stop system within their local jurisdictions.
HOW PART I IS ORGANIZED
This Introduction describes the One-Stop required partners, partner responsibilities for costs, and the Federal Register notice that is the basis of this part. This chapter also provides the user an overview of Part I and cautions for use of the guide.
Chapters I-1 through I-6 describe the methodologies for cost allocation and resource sharing within the One-Stop environment. An overview of what is contained in each chapter is given in the following paragraphs.
Chapter I-1, Identification of Shared Costs, describes the types of costs that might be considered as shared costs within the individual Stop centers and discusses the impact of One-Stop participant flow and service design on shared costs. It provides an overview of the different types of One-Stops (i.e., fully integrated, co-located) and their impact on shared costs, including electronic data sharing and technology costs. There are also discussions of what to do when partners cannot agree on costs, and of allowable and unallowable costs as they relate to partner organizations. Chapter I-2, Shared Costs Budgets, describes the process used to develop a standard budget format for shared costs, including the exclusion of direct program costs of each partner program and the manner in which the shared budget relates to the partner agencies’ budgets. The chapter includes sample templates for budget development.
Chapter I-3, Proportionate Share and Cost Allocation, discusses determination of a proportionate share for each/all partner(s) and methodologies for determining relative benefit received by the partner programs. The chapter also describes cost allocation requirements as found
different methodologies for cost allocation and determining the proportionate share attributable to each partner, the cost allocation agreement, data sharing, and reconciliation of actual costs, including adjustments to the resources to be contributed by each partner as may be required. A discussion is also included of costs benefiting a nonparticipating partner organization and shared costs that are unallowable to one/multiple partner’s program when there is a direct benefit to the partner.
Chapter I-4, Resource Sharing, describes the various methodologies that might be used to pay for the shared costs. The chapter contains a discussion of different types of resources (i.e., goods, services, cash, or in-kind contributions) that each partner might use to fund its proportionate share of the costs, methods that might be used when partner organizations are unable to provide full funding of their proportionate share, and the use of cash contributions to fully fund proportionate shared costs, as well as a discussion of required adjustments based on actual costs.
Chapter I-5, Resource Sharing Agreements, discusses the elements of the RSA, dispute resolution, data sharing and privacy considerations, modification processes, and the audit responsibilities related to RSAs. It also discusses the relationship of the RSA to the MOU, including modification, and the cost items required by legislation and regulations.
Chapter I-6, Case Studies, contains four case studies designed to illustrate in practical terms the concepts contained in Part I. The case studies reflect a number of different types of One-Stop models and resolution of problems encountered in the processes.
CAUTIONS
The information provided in Part I of the TAG is intended to aid One-Stop partner agencies in developing funding mechanisms for the One-Stop shared costs. It is not intended to supplant or replace regulations and requirements contained in applicable OMB circulars but to provide practical examples and clarification of the uniform policy contained in the Federal Register notice on cost allocation and resource sharing. Wherever the TAG is quoting the Act or the regulations, citations are provided immediately following the reference.
Partner agencies utilizing the information in this TAG to develop the MOU and RSAs are urged to provide their independent auditors with adequate information about the processes they have followed to develop an RSA. Costs incurred in support of the One-Stop operation must be available for an audit in accordance with the requirements of OMB Circular A-133.
Appendices A through E provide additional resources for the user. Appendix D contains a comprehensive glossary. Within the regulations, legislation, and OMB circulars, there may be more than one definition of a single term. When possible, this TAG uses the more extensive definition or the definition found in the legislation. In addition, some terms may have similar definitions that may be named differently, i.e., grant and award. If in any instance the definitions or their use in this TAG appear to conflict with the Act or Federal regulations applicable to each ETA-funded program, such conflict must be resolved in favor of the Act and the regulations, which take ultimate precedence.
Attachment I-Intro-1 Cost Allocation Step 1 Identification of Shared Costs Step 2
Shared Costs Budget
Step 3
Proportionate Share and
Step 4 Resource Sharing
Step 5 Resource Sharing
Agreements
Identification of Shared Costs
INTRODUCTION
Part I of the TAG is designed to provide operational guidance on the cost allocation and resource sharing requirements of the WIA. The first step in the process is identification of the shared costs. This chapter discusses the types of One-Stop service delivery designs, the types of costs that might be considered as shared costs, the impact of program design on identification of costs, allowable costs, and partner restrictions. The chapter also contains sample lists of costs and the following sections:
• One-Stop System Design • Identification of Shared Costs • Uses of Shared Costs
• Allowable Cost Considerations
• Attachment I-1-1—Identifying the Shared Costs Process Flow • Attachment I-1-2—Sample List of Shared Costs.
ONE-STOP SYSTEM DESIGN
The One-Stop system described in the WIA and the implementing regulations requires the collaboration of a number of Federally funded workforce development activities. The Act and the regulations further stipulate that the required partners in One-Stop activities share in the costs of the system. The shared costs of the One-Stop center or system are those costs that benefit multiple partners. In order to comply with these requirements, WIA One-Stop operators and their partners must first identify what the shared costs of the local One-Stop are, how they are defined and dollar values attached, and subsequently, how those costs will be funded. The design of the local One-Stop system, including the number of physical centers, the access to and flow of services, and the types of services to be provided, will have a major impact on the types of shared costs. It is important to note that, because the WIA One-Stop program is intended to achieve maximum local programming flexibility to meet the needs of each area’s customers, the shared costs and resources needed to pay for those costs will vary. The discussion in this TAG is designed to provide options to all partners as they develop the One-Stop system.
As stated earlier, the design of the local program has a tremendous impact on the costs. As described in the Federal Register notice dated May 31, 2001, the three basic types of One-Stop systems are:
Co-Location with Coordinated Delivery of Services. Under this model, several or all of
the partners coordinate the delivery of program services and share space. Each program retains control of its own resources and maintains a separate identity. While the program services may be coordinated to prevent duplication or overlap, each program pays for its costs as direct program costs to its own program. The only pooled costs are those shared jointly with other partner agencies.
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•
•
Full Integration. Under this model, all partner programs are coordinated and administered
under one management structure. There is joint delivery of program services. As there is also full integration of resources, the costs would then be pooled and allocated back to the partner programs using an appropriate cost allocation methodology.
Electronic Data Sharing. With this model, there is no co-located staff or shared space; only
program information is provided. On its own, this model will not comply with the requirements for a full-service One-Stop center. It should be used as a means of supplementing or augmenting the activities and services available at a full-service One-Stop.
The ETA’s vision of One-Stop systems is the Full Integration model. The model is customer driven, and the integration of services and management structures will lead to more efficient and effective delivery of services and will increase available services through cost savings. The model may be implemented in phases as partners within the One-Stop system realize the benefits of operating in this manner.
Whatever model is used within a local workforce area, the delivery system impacts on shared costs. For example, in the Co-Location model shared costs may be limited to facilities costs, equipment and some operational costs related to the resource center, while in the Full Integration model, all the costs of the One-Stop, such as facilities, personnel, equipment and supplies, and services or activities such as career counseling, intake, job development, etc., would be pooled and considered to be shared costs. The Full Integration model maximizes the resources available to serve both employers and job seekers and provides for the truly seamless delivery of these services.
IDENTIFICATION OF SHARED COSTS
With the exception of costs under the Full Integration model, not all the costs of operating the One-Stop system will be considered shared costs. Each program will have some direct program costs for those services provided to customers eligible only for its program. This section of Chapter I-1 discusses those costs that might be considered as shared depending on the system design in place at an individual One-Stop center or within a One-Stop system. The more items of cost are considered as shared costs, the easier it will be for partners to fund those costs through available resources.
Those partner agencies providing the services through the One-Stop model for their local area have the responsibility to identify shared costs. For purposes of this TAG and the discussions on cost allocation and resource sharing, shared costs are defined as those costs of the
services delivered through a One-Stop. Many of these costs, such as facilities, will be easier to identify, while others, such as the costs of system development, may be more difficult to both identify and define.
The first step in identifying the costs is to determine what costs might be included and to write a preliminary list of the shared costs. Attachment I-1-1 is a schematic showing the tasks in this process. The list of costs in Attachment I-1-2 provides examples of shared costs in a preliminary list format. It is important to note that this listing is not all-inclusive but is intended to provide examples of shared costs.
Facilities. This includes the costs of rent, maintenance, janitorial services, utilities, tenant
improvements, etc., that would be incurred for co-located or fully integrated One-Stops. • • • • • • •
Telecommunications. This includes the costs of telephone systems, data lines, Internet
access, etc.
Universal Access. These costs might include the cost of providing information in the
resource center, information on available employer services and on available training providers, developing the marketing plan, labor market information, and the costs of America’s Career Kit (Career One-Stop as of September 2002), America’s Job Bank, electronic job search information, etc.
Common Supplies and Equipment. These costs include the costs of furniture and other
equipment such as computers, fax machines, copiers, etc., as well as those supplies such as paper, printing of brochures, One-Stop center letterhead, signage, etc., that will be used by multiple partner agencies (staff resources) or available for use by customers.
Resource Center. These costs are associated with providing universal access and a common
area for self-directed job search, information on available programs, common workshop space, computer labs, distance learning facilities, and other types of client resources.
Common Employer Services. These costs would include the costs of providing specialized
screening for employers, initial interviews to determine qualifications, local employer roundtables, or other types of employer-specific services.
Common Program Services Staff. These costs are the salary and benefit costs associated
with the common eligibility determination and intake function performed for multiple customers. They also include the staffing costs associated with initial reception at the One-Stop, staffing the resource center, staffing shared core and intensive services, and operational management of the One-Stop center. These costs are designed to maximize program activities and services available at the One-Stop center. The following chart displays a number of programs that have authorized the same or similar common core services. Partner agencies should use this chart as a beginning point in integrating common core services as a shared service and cost.
Based on a review of the legislation and regulations, each of the programs listed in the table provide core and intensive services (regardless of whether the services are labeled by each program as core or intensive). Services are listed in the left-hand column. Programs are listed across the next six columns. A blank indicates only that the specific service is not listed for a specific program, not that the cost item is unallowable. It may be part of another service.
Examples of Common Services
Services WIA Adult WIA Dis Wkr Wagner Peyser* UI Welfare to Work Voc Rehab
Intake & Eligibility Y Y Universal Y Y Y Indiv. Employment Plan
Indiv. Development Plan Y Y N N Y Y
Initial Assessment Y Y Y Y Counseling & Guidance/Career Counseling** Y Y Y Y Support Services Y Y Y Y Outreach Y Y Y N Needs-Related Payments Y Y N Case Management Y Y Y N Career Counseling Y Y N Job Search Y Y Y Y Y Placement Assistance Y Y Y Y Y Job Retention N Y Y Follow-Up Services Y Y Y Y Transportation Y Y Y
* Wagner-Peyser authorizes WIA core and intensive services.
** Career Counseling is not included in Vocational Rehabilitation; however, Counseling and Guidance is included.
When developing this preliminary list of shared costs, partner agencies should also be aware of the provisions of Section 134(a)(2)(B) of the WIA. This section states that assisting in the establishment and operation of the One-Stop delivery system is a required statewide activity. This provision lists a number of activities that may be funded, including the payment of such costs as equipment for the resource room or the One-Stop manager. These activities are also examples of costs that might be considered as shared costs. If the State provides such funding to the LWIA as an enhancement of the local One-Stop system or as an incentive for participation by partner agencies, then the costs associated with these activities would not be included in the shared costs to be allocated to partner agencies. They may also be shown as shared costs that are funded by non-partner resources. This provision is also discussed in Chapter I-4, Resource
Sharing.
with a working knowledge of their program funding and operations to work together to identify, value, and negotiate the shared costs. Once the preliminary list of costs has been identified, a function and benefit statement should be developed for each cost or group of costs. These statements provide the documentation to support the allowability and allocability of shared costs under partner programs.
When defining what comprises the shared costs, grantees and other partner agencies should consider the following:
Facilities. Defining the costs of facilities will depend on a number of factors. If the building
is owned by one of the partner agencies, the allowable cost standards will dictate how the requirement for the consistent treatment of costs must be resolved. If the building is leased by one of the partner agencies, then the portion of the lease attributable to the One-Stop operation would be considered as the shared cost. Partner agencies must also determine what the lease/rent payment is in support of and whether the costs include such items as maintenance, security, and janitorial services. If tenant improvement costs are included, the length of the agreement, whether the cost should be depreciated and over what period of time, and whether the improvements comply with regulations on real property and capital assets must also be considered.
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Technology Costs. When defining technology costs, the number of workstations,
networking capabilities, software needs of partner agencies, licensing fees, and hardware (computers, servers, common printers, scanners) must be considered.
Supplies. When defining shared supplies costs, consideration should be given to such items
as letterhead stationary, unique signage for the One-Stop center, brochures (and the associated printing costs) describing services available at the One-Stop, and supplies like copier paper that benefit all co-located staff.
One-Stop Management. The costs of the One-Stop center director would be included as a
shared cost benefiting all co-located partners. If the center director also has program management responsibilities such as the WIA program, then WIA would bear a greater share of the cost. Also included in the shared One-Stop management costs would be the staff who greet the public, staff the resource center, and other common operational staff such as information technology (IT) professionals responsible for maintaining the computers and telecommunications.
Integrated Program Staff. If the One-Stop model used in the local area includes integrated
services such as the provision of core services or a common intake and eligibility determination system, then the costs associated with these programs or services would be considered shared. Examples of these costs would include salary and benefit costs of staff performing the services, costs associated with developing a common intake form, the costs of automating the eligibility determination system, and costs of core services such as job search assistance or workshops on financial health.
Resource Center. Costs associated with setting up and maintaining a resource center will
vary depending upon the size of the resource center and types of activities and services available to the public within it. Consideration should be given to including the equipment necessary to provide electronic access to job postings such as the Wagner-Peyser-funded listings; conference room/classroom furniture and equipment such as liquid crystal display (LCD) projectors, flip charts, etc.; the costs of subscriptions to newspapers and periodicals; and reference books or tools such as job search software or computer learning software. Staffing the resource center could be included in this listing or as separate category. The shared costs of the resource center would not include such items as information relating to a single partner program, one-on-one program services provided by a partner agency staff person, or any other costs that benefit only a single program.
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• Electronic Data Sharing. The composition of shared costs associated with electronic data sharing will also vary based on program design and the physical layout(s) of the chosen One-Stop model. Consideration should be given to including the costs of necessary hardware and software to create and maintain electronic data sharing, the costs of Web site development, including the necessary electronic links to partner programs (whether they are co-located or not), networking costs such as servers, staff to maintain the electronic system, the development of common data systems such as intake and eligibility and the training needed for staff to utilize them, the costs of computer-assisted learning for customers, etc. Additionally, similar costs will be associated with providing electronic job search or One-Stop information through a system of computer terminals located within the community such as at kiosks in a local shopping mall or within government buildings such as a courthouse.
USES OF SHARED COSTS
Using a preliminary list of shared costs, partners should then begin the process of identifying how the costs are of benefit to each of the partner programs. This is done through the development of function and benefit statements for each cost item or group of costs. The function and benefit statement provides each partner with an understanding of how the shared costs will benefit its particular program. Under some models, not all shared costs will benefit all partners. For example, within the resource center, costs associated with printed forms and documents may benefit only a single program. Inclusion of these materials within the resource center does not mean that the cost must be shared. Often, a partner will not see the benefit to be derived from participating in some of the shared costs. When a partner or partners refuse to participate in a shared cost, then they must bear their own direct costs for the activity or function until the remaining partners demonstrate the benefit of sharing the cost. This issue is also discussed in Chapter I-3, Proportionate Share and Cost Allocation.
The next important step in the identification of shared costs is developing the dollar value for costs. It is important that grantees and partner agencies do not develop the actual cost data through assigning the resources each agency will need to provide to support the One-Stop system. One problem that has been encountered within the One-Stop system is the tendency of partners to decide in advance how they will provide resources to fund shared costs, without taking the first step of defining what those costs should be or how much they are.
located space or payment of the janitorial costs, then these costs will be known. If equipment has been bought in the recent past by a partner program, then these costs will be known. When no hard cost information is available, the partner agencies should estimate or use averages (for example, using fair market value to determine the cost or to develop use allowances) to cost out the items in question. Once the costs have been estimated, they can be refined through the budget development and cost allocation processes to follow.
ALLOWABLE COST CONSIDERATIONS
Grantees and partner agencies are required to adhere to the cost principles embodied in the OMB circulars and reflected in program regulations. Each partner should bear the responsibility for determining the allowability of shared costs under its own program requirements. Each partner is also responsible for ensuring that the costs receive consistent treatment across programs as required by the Federal cost principles. For all Federally funded required partners, the OMB circulars will apply. Therefore, unless the costs are prohibited under program legislation, regulations, or the OMB circulars, the shared costs identified in this step should be allowable for all required partners. If the shared costs relate to the purchase of equipment, capital improvements, or other services requiring the approval of the awarding agency, that approval requirement is met by the agency providing the resource. For ETA formula grantees, that approval authority has been delegated to the Governor. These requirements are more fully discussed in Chapter I-4, Resource Sharing.
Occasionally, a shared cost is unallowable under the Federal program regulations of a partner agency. Unless the cost does not benefit the partner with the prohibition, it must be allocated to all benefiting partners. The partner under whose program the cost is unallowable would be responsible for identifying a non-Federal source of funds to cover the cost(s). The cost could not be allocated to only those partners under whose programs the cost is allowable, as this would signify that they had paid more than their fair share of the cost, in violation of the Federal cost principles. This concept is discussed again in Chapter I-3, Proportionate Share and Cost
Allocation.
ATTACHMENTS
There are two attachments to this chapter. Attachment I-1-1 shows the progression of activities in the task of identifying shared costs. Attachment I-1-2 is a sample list of shared costs with dollar values and function and benefit statements provided for a few of the costs. The list is not all-inclusive but is intended to provide grantees and partner agencies with a beginning point to develop their own lists of shared costs. This list will also be used in Chapter I-2, Shared Costs
Budgets.
Attachment I-1-1
Identifying the Shared Costs
Process Flow
Develop One-Stop Model Finalize Shared Costs Ensure Allowability, Prior Approval, andOther Conditions Met Assign Dollar Values Develop Preliminary Statement of Benefit Identify Preliminary List of Costs
Sample List of Shared Costs
Cost Item Yearly Cost Benefit
Facilities Costs
Rent $100,000 Leased space provides central access to services, thereby benefiting all co-located partners.
$25,000
($50,000 total costs)
Changes will enhance service
delivery, provide for universal access and compliance with the Americans with Disabilities Act (ADA). Tenant improvements
(Length of Agreement) 2 years Improvements spread over life of agreement. Building maintenance Building security Operations Costs Telephone costs Data/communications cost IT maintenance Shared equipment Copier (staff use) Fax (staff use) Common supplies
Paper for copier, fax, etc. Pens, pencils, other supplies Equipment maintenance Resource Center Supplies Software Hardware Printed materials
Other (List Each Cost)
Employer services Electronic data sharing
Common Staff (Position)
Expressed as $$ or full-time equivalent (FTE)
Center director Receptionist Core services staff
Chapter I-2
Shared Costs Budgets
INTRODUCTION
This chapter discusses the second step in the process—the development of a shared costs budget. It includes a discussion of how the shared costs budget will differ from partner agency budgets, the structure of the budget, and the relationship of the shared costs budget to each partner agency budget. It also includes budget templates and a sample budget. The chapter contains the following sections:
• Budget Development and Structure • Relationship to Partner Agency Budgets • Modification and Adjustment
• Benefits
• Attachment I-2-1—Developing a Shared Costs Budget Process Flow • Attachment I-2-2—Sample Budget Format 1
• Attachment I-2-3—Sample Budget Format 2.
BUDGET DEVELOPMENT AND STRUCTURE
As part of the process for determining the shared costs and the resources available to fund the One-Stop operations, the One-Stop operator and partner agencies need to develop a common budget document that displays the agreed-upon shared costs. A common budget document gathers the shared costs of the One-Stop center or system into a single document and provides all partner agencies with a roadmap of the One-Stop costs that they will share in funding. The budget provides all partners with a standard plan for One-Stop expenditures over time. A schematic showing the steps in the budget development process is Attachment I-2-1 to this chapter.
Any number of budget formats may be used. The key in this step is for the partners to agree upon a single format that may be used to trace costs to their own agency budget documents and that reflects only the shared costs identified by the partners. Budget structures vary among organizations but usually contain listings of proposed costs for operation and services grouped within either line items or cost pools.
The use of a single standardized budget format helps all partners to develop and present the costs in a way that is understood by all the partner agencies. Without this standardization, it is difficult to be sure that the costs are appropriately identified and costed. A standardized set of
because it gives all partners the same basic pattern for presenting the information, the same set of questions to answer, and the same detailed instructions for completion. A standard format also provides partners with an easier method to review and adjust the budgets based on actual expenditures or to modify the budgets with the addition of new partners or integrated services.
Whatever format is chosen or used by the partners to display the shared costs, the information required to complete the budget process comes from the list of shared costs discussed in Chapter I-1, Identification of Shared Costs. The costs would be grouped by services, cost objects, line items, etc., and projected over the budget period. The information in the budget will form the basis for determining the proportionate share attributable to each partner and the cost allocation among the partners, and will indicate the types of resources that will be needed. The resource sharing step of the process is discussed in Chapter I-4, Resource Sharing.
Prior to finalizing the shared costs budget, partner agencies should ask the following questions and make any adjustments to the budget that might be necessary:
• • • • • •
How valid are the assumptions used in calculating the budget figures? Are the assumptions used consistently across the whole budget? Examples of some assumptions used in developing the budget would be the number of customers using the center on a monthly basis, the need for audio-visual equipment, the need for staff to provide common services or conduct intake and eligibility determinations, maintenance needs, or utility costs based on weather, etc.
What supporting information or documentation was used in developing the budget? How accurate was the information? The partners, as a group, must decide what source of information will be used to determine the dollar amounts for each shared cost.
What process was used to develop estimates used in developing the budgets? Are controls in place to ensure accurate estimates based on supporting documentation rather than estimates tailor-made to generate a preconceived bottom line?
How will possible changes in operation, client flow, need for services, etc., influence the assumptions and calculations used in developing the budget?
What is the impact of partner agencies coming on board at different times or partner agencies withdrawing from participation?
How closely does the overall budget and its specific numbers compare with similar or related budgets within the same area or organization? Note: This question may not be relevant during the first year of operation as a One-Stop but will be necessary to ask in subsequent program years or budget periods.
RELATIONSHIP TO PARTNER AGENCY BUDGETS
The shared costs budget developed for the individual Stop center or for the One-Stop system as a whole is distinct from the budgets traditionally prepared by an agency. It provides a roadmap of shared services and costs but is not tied to a revenue source. The revenues that will be used to fund the budget are, in fact, the resources each agency will provide. It is critical that the shared costs budget information (cost items and amounts) developed by the partner agencies can be traced to a partner agency budget, and then to the partner agency books of account, in order to comply with the OMB circular requirements for cost principles and cost allocation. Consistency with partner records is not independent, but interdependent. The shared costs also need to be available for audit under the provisions of OMB Circular A-133.
Partner agencies may wish to code line items or object classes in such a way that the costs may be traced to each partner’s own agency budget. Partners could develop a code listing all the budget items within the shared costs budget and cross-reference the items to each partner agency’s budget items.
Example: The shared costs budget could list salaries of common staff positions
as Classification 1000. The cross-reference list would display the classification thus: 1000 Salaries Partner A – 2330 Partner B – 5001 Partner C – 5000 Partner D – 7000
Many of the costs contained in the shared costs budget will require the prior approval of the granting agency. These items should be designated as prior approval condition items. The agency initiating the purchase of the item when the actual resources are identified will have the responsibility for obtaining the appropriate approval from its grantor agency. This requirement is also addressed in Chapter I-1, Identification of Shared Costs, and Chapter I-4, Resource
Sharing.
MODIFICATION AND ADJUSTMENT
Once the budget document has been finalized and approved by all the partner agencies, it will not just sit on a shelf gathering dust. The budget is a dynamic document, subject to change as programs and service needs change within the One-Stop environment. The One-Stop operator and partner agencies must also decide what process will be used to modify or adjust the budget as the need arises during the program year. There are numerous reasons why a budget might need to be modified. For example, as the One-Stop moves from simple co-location to a model of fully integrated services, the budget will need to be modified to include the additional shared costs of providing common services. Also, the budget is usually developed using estimated dollar values. As the costs become known, and as the One-Stop operation becomes more refined, the budget will need to be adjusted. The decision on when the budget is to be modified
modification or adjustment does not require a modification to the MOU unless required by the terms of the MOU. The MOU modification process is spelled out in the MOU and will relate to the services, relationships, and terms discussed in the MOU. A simple adjustment to the budget based on actual costs would not alter the relationships or referral mechanisms contained in the MOU. If, however, the MOU is modified, partner agencies are cautioned that they should review the shared costs budget, allocation process, and the RSA, and modify them as necessary. If, for example, an additional partner begins providing services at the One-Stop center, then the RSA and the MOU would both be modified.
The budget should be reviewed and adjusted on a periodic basis, at least quarterly, by all the partner agencies. As most Federal grant programs require quarterly financial reporting, it would be easy to schedule a review and adjustment of the shared costs budget in the month following the report submission.
Example: The shared costs budget for a One-Stop center indicates a need for an
LCD projector. At the time the projector is acquired, the partner providing the resource is able to combine the purchase with a similar purchase for its agency and receives a discount. Thus, the original planned cost is less than estimated. The budget would be adjusted to reflect this in the quarter following the purchase.
BENEFITS
The development of a shared costs budget is an important planning and managerial tool. Properly done, it involves a careful review of the One-Stop center’s programs, activities, and goals and allows judgments to be made about which are relatively more important than others and what resources to commit to each one. Budgeting is a natural component of the overall One-Stop planning and management process in at least four ways:
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A budget shows the LWIB and partner agency managers all the work of the One-Stop, places these programs in relation to one another, and provides a clear illustration of the overall direction and effort of the One-Stop.
All of the One-Stop’s projects, commitments, services, and customer flow are reflected somewhere in the budget. It affords the LWIB and managers a place to start when they want to combine services or provide a more comprehensive system of services to customers.
The budget shows all the proposed shared expenditures and thus gives a very clear picture of the resources needed by the One-Stop center or system during the upcoming budget period. By consolidating the needs for different types of services, managers may achieve economies of scale and make use of equipment, training resources, or staff that might otherwise be underutilized.
• As the budget is a visual reminder of the shared costs and services of the One-Stop center or system, it provides a “checklist” that the LWIB and partner agencies can use to ensure they know and approve of the services being conducted.
The development of a shared costs budget will also make the move to a Full Integration model easier to accomplish, as partner agencies will be aware of all the costs.
ATTACHMENTS
There are three attachments to this chapter. Attachment I-2-1 provides the progression of activities that must be undertaken to develop a shared costs budget. Attachments I-2-2 and I-2-3 are sample budget formats that might be useful for partner agencies. Each format displays the required information in a slightly different manner. These formats may be modified as needed to meet local One-Stop design and management considerations.
Developing a Shared Costs Budget
Process Flow
Develop Review and Modification Process
Spread Costs over Budget Period Accumulate Costs by
Line Item or Cost Object
Agree upon Budget Format
Attachment I-2-2
Sample Budget Format 1
Date:___________________________________ One-Stop Name:__________________________ Location:________________________________
Cost Item Cost Basis Monthly Cost Yearly Cost Facilities Costs Rent Actual $5,000 $60,000 Tenant improvements (Length of agreement) Building maintenance Building security Operations Costs Telephone costs Data/communications cost IT maintenance Shared equipment Equipment maintenance Resource Center Supplies Software Hardware
Printed materials Estimate n/a – one-time cost
$5000
Other (List Each Cost)
Common Staff (Position)
Cost Item Description of Cost Partner Benefit
Rent Rent for leased space of One-Stop center, includes all utility costs.
Leased space provides central access to services, thereby benefiting all co-located partners. Tenant improvements Telephone costs Data/communications cost IT maintenance Shared equipment Equipment maintenance Resource Center Supplies Software Hardware
Printed materials This cost includes a unique letterhead designed for the One-Stop center and two brochures for distribution to employers and the general public.
Identification of a
comprehensive One-Stop will provide single point of access for employers and clients, increasing
performance.
Jul
Attachment I-2-3
y 2002 I-2-9 Shared Cost
Sample Budget Format 2
Cost Item Quarter 1 Quarter 2 Quarter 3 Quarter 4 Totals
Shared Services Staff Staff salaries Fringe benefits for staff Staff travel Facilities Rent Utilities Security Maintenance Communications Base telephone Long distance T-1 lines Etc. for All Shared Costs
Proportionate Share and Cost Allocation
INTRODUCTION
This chapter discusses the third step in the process: the determination of proportionate share and allocation of the shared costs by partner agencies. It includes a discussion of the various methods that might be used by the One-Stop operator and partner agencies to determine their proportionate share of the costs. It also includes a discussion of cost allocation requirements for Federal grants, cost allocation in the One-Stop setting, allocation bases, and their application to shared costs. The chapter contains discussions on the use of spreadsheets, the cost allocation plan for shared costs, and includes sample allocation formats. It also contains a discussion of what steps should be taken when costs benefit non-participating partners or when the identified shared costs are unallowable to a particular partner. The chapter contains the following sections: • • • • • • • • • • •
Determining Proportionate Share Cost Allocation Requirements Allocation Methodologies Allocation Bases
One-Stop Cost Allocation Plans Additional Considerations
Attachment I-3-1—Steps in the Cost Allocation Process Attachment I-3-2—Shared Costs by Partner
Attachment I-3-3—Cost Allocation by Item of Cost Attachment I-3-4—Sample Allocation Table
Attachment I-3-5—One-Stop Center Shared Costs by Program.
DETERMINING PROPORTIONATE SHARE
The WIA regulations require that each partner contribute a fair share of the operating costs of a One-Stop system proportionate to the use of the system by customers who are attributable to the partner’s program. [20 CFR 662.270] While this requirement is intended to ensure that partners establish standards for whether or not each partner program is required to share in a particular cost, it does not prescribe the exact methodology to be used to allocate shared costs nor determine each partner’s proportionate share. In fact, the regulations make it clear that partner agencies may choose from any number of methods, provided they are consistent with the OMB circulars. Any method that initially uses estimated numbers, whether
